The legislature shall have general supervisory jurisdiction over all state owned
lands useful for forest preserves, game areas and recreational purposes; shall
require annual reports as to such lands from all departments having supervision
or control thereof; and shall by general law provide for the sale, lease or
other disposition of such lands.

Thus, the sale of land is a legislative power.

In the instant case, it is instructive to set forth the pertinent portion of
2004 PA 326 and to note its differences from the pertinent portion of 2002 PA
671. The pertinent portion of 2004 PA 326, § 2 states:

(1) The state administrative board, on behalf of the state, and subject to the
terms stated in this section, may convey for consideration the board considers a
fair exchange of value for value . . . all or portions of certain state owned
property now under the jurisdiction of the department of community health, known
as the Ypsilanti regional psychiatric hospital, located in the township of York,
Washtenaw county, Michigan. ...

(2) In determining whether consideration for the property described in this
section represents a fair exchange of value for value, the board may consider
the highest return and best value to the state based on either or both of the
following:

(a) The fair market value of the property described in this section as
determined by an appraisal prepared for the department of management and budget
by an independent appraiser.

(b) The total value to the state of the sale of the property and the best
interests of the state, including, but not limited to, any positive economic
impact to the state likely to be generated by the proposed use of the property,
especially economic impact resulting in the creation of high-technology or
highly skilled jobs or increased capital investment for research and
development.

Id. (emphasis added). Therefore, the SAB could sell the property based on “total
value” and “the best interests of the state,” factors that would be determined
by any methods chosen by the SAB itself.

In contrast, under 2002 PA 671 the SAB was required to obtain fair market value
for the property, Id. at § 13(1), which would be determined after an appraisal.
Id. at § 13(2). The sale was also required to “realize the highest price for the
sale and the highest return to the state.” Id. at § 13(3).

The telling differences between 2004 PA 326 and 2002 PA 671 do not end there.
Under 2004 PA 326, the sale of the property can occur through a competitive
sealed bid process, a public auction, the use of a real estate brokerage system,
or a negotiated sale process — i.e., discussions between the DMB and a single
entity, such as the entity in the instant case, Toyota. Id. at § 2(3)(d). Under
2004 PA 326, the DMB, like the SAB, was permitted by the Legislature to consider
amorphous criteria:

(d) A negotiated sale process conducted by the department of management and
budget in a manner to provide the state with consideration for the property
representing at least a fair exchange of value for value. In determining whether
consideration for the property described in subsection (1) represents a fair
exchange of value for value, the department may consider the highest return and
best value to the state based on either or both of the following:

(i) The fair market value of the property described in subsection (1) as
determined by an appraisal prepared for the department of management and budget
by an independent appraiser.

(ii) The total value to the state of the sale of the property described in
subsection (1) and the best interests of the state, including, but not limited
to, any positive economic impact to the state likely to be generated by the
proposed use of the property, especially economic impact resulting in the
creation or retention of high-technology or highly skilled jobs or increased
capital investment for research and development, as determined by the
department.

Id. (emphasis added). But under 2002 PA 671, there was no “negotiated sale
process” and again, the standard to be applied involved a concrete legislative
guideline (the highest price for the land), not the vague and open-ended
criteria listed above.

Yet another instructive difference between the two acts was that 2002 PA 671
required the state to retain mineral rights for the property. When Toyota made
its unsuccessful $9,000,000 bid under the 2002 act, it did not agree to the
state’s reservation of these mineral rights. Interestingly, 2004 PA 326 stated
that the state “shall not reserve oil, gas, or mineral rights to property
conveyed under this section,” Id. at § 2(8), although the state would be
provided with one half of the revenue generated from any subsequent extraction
of minerals from the property. Id.

This provision was not the only change that appears tailor-made for Toyota. The
Legislature allowed the DMB to negotiate solely with a single party (in this
case Toyota), and the Legislature likewise eliminated the requirement that the
DMB obtain the best price for the land. This had the effect of removing DPG
York, a demonstrably higher bidder, and other companies that were potentially
higher bidders, from the process. The Legislature also agreed in 2004 PA 326 to
pay any costs of preparing the property for sale, environmental remediation of
the property, or litigation related to conveyance of the property. Id. at §
2(11). While any of these concessions would have been available to any buyer of
the land, Toyota in particular faced the likelihood of litigation over
conveyance of the property, given that DPG York had already filed suit against
the state at the time this legislation was approved.